This probably isn’t a definitive or particularly detailed list and I’m sure you will find other tasks/actions you need to do to get up and running properly. Many of these will come from reading the Text in my Blog Series and also from your own particular requirements, but these are a rough set of Guidelines to give you some idea of what needs to be done to get going with your Income Portfolio:
1. If you are totally new to this then buy Naked Trader Book - chances are if you have already dabbled in Stocks you will have read Robbie Burn’s excellent book, but if this is entirely new to you, then I recommend you nip over to ‘Wheelie’s Bookshop’ and get a copy. It is pretty cheap really and would definitely be money well spent. Much of it will be more related to Small Stocks and an Approach focused on capturing Capital Gains rather than the Dividend Payments but it is still pretty much the clearest and most simple book on Investing/Trading and it covers a lot of important concepts in far more detail than I can in this Blog Series. There are also a lot of complementary bits like Robbie’s explanation of how he uses the ADVFN News feature to analyse Company Trading Updates etc. There is also quite a bit on the detailed process of how to Buy and Sell a Share and stuff like that.
2. Draw up a set of Rules - I have done a chunk on this elsewhere in the Blog Series and I have also included a Link to a Blog I did before which has an example of this kind of thing. In essence these Rules are your high-level guidance and set out stuff like your Targets for each year and the criteria you will use to help select appropriate Stocks to hold in your Income Portfolio. These Rules are vital to ensure you keep discipline and don’t do stupid mistakes like Buying 17 Shares when you said you would only have 15 or perhaps putting 20% in a particular Stock when your pre-defined Limit is just 6%. This is much more important than most people realise and you must keep disciplined and stick to clear and simple Rules if you are going to make a success of this. Of particular importance is an Overall Yield Target for your Income Portfolio and the Total Return (Dividends plus Capital Gain) you want per year. Start from here and then drill down to the detail for individual stocks which support this higher level goal - e.g. if looking for 8% Return per Year in Total, then you might struggle if you try to buy Stocks with only 1% Divvy - so set a Minimum Divvy Level for the Stocks you will consider in your universe of Possible Buys. Specify which Sectors you want to have exposure to (and perhaps which ones you definitely don’t want) and of course how many Stocks you will hold.
3. Get the ADVFN App to monitor your Portfolio - this thing is just superb and I use it many many times during the day. Obviously for a minimal effort and low Risk Income Portfolio you don’t need to be constantly looking at it but it is very handy to have a tool which enables you to quickly see how things are going and where you can find News items if you want to see them. With the App you can obviously shove it on your Fone so if you have some dead time on a Train or something you can take 5 minutes to see how your Stocks are doing etc. - it just gives you a really flexible way of keeping up to date with things. You can also load the App onto a Tablet or iPad etc. and you can access the ADVFN.com website through a Browser on a PC and/or Laptop etc. You might need to Register with ADVFN.com first before you can use the App - I am not sure if you can Register just through the App without going via the Browser version (it‘s probably 17 years since I got my ADVFN account). In addition to looking at your Portfolio of Stocks, you can set up a ‘Watchlist’ where you can put in Stocks that you are looking to buy or whatever. When you are first getting started, it makes sense to build up a Watchlist of the Stocks you want within the ADVFN App and as and when you buy them you can move them into your actual Portfolio of Holdings on the App. I did a Blog that is very much dedicated to the ADVFN App with pictures and stuff and you should find a Link at the end of this Blog.
4. Draw up list of Stocks you want to Buy and the Target Prices to buy them at. Take your time - no rush, the Lower you buy the better as the Dividend Yield you get will be higher, but obviously you don’t want to be “Buying trouble” so don’t buy something after a Profit Warning just because it has tanked and appears to be offering you a massive Dividend Yield - the chances are a troubled Stock will cut its Dividend and that is the last thing you want. Selecting these Stocks and setting the Target Prices is obviously a key part of the Process and if you screw up and have to sell a Stock and buy another to replace it, then you are going to be wasting Money on Dealing Fees and stuff, so try to get it ‘Right first time’ and think carefully (although you need to appreciate that Trouble is to an extent unavoidable and that is why you need a Diverse Portfolio). By the way, you don’t need to buy all the Shares at once - it is just as well to buy them in steps - perhaps focus on a couple and buy those first and then gradually buy others as the Target Prices are reached - there is no rush.
5. Set up a Share Dealing Account - After writing this Section it dawned on me that a separate blog that is more ‘generic’ rather than specific to Income Portfolios would actually be a useful addition to the WD Website ‘Blog Archive’ - so if you click on the Link below you can see this:
6. Have a look at the ‘Beginners’ and ‘Useful Links’ bits on this Website - I have put some further things to look at and suggestions etc. on the page that contains these elements.
That’s it for this Part, next time we will start looking at how to find Stocks for your Income Portfolio and following on from this I will provide a load of possible Stocks to consider with some short comments around each.
Here is the one with the ADVFN App stuff in it:
And cos I am so generous here is the Rules Blog again to save you digging it out:
Welcome to my Educational Blog Page - I have another 'Stocks & Markets' Blog Page which you can access via a Button on the top of the Homepage.
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